Download Growth Policy Formulation

Growth Policy Formulation
Can East Asia Teach Anything to Africa?
Kenichi Ohno (GRIPS)
March 2008
High Performance (on average)
East Asia achieved high average
growth in recent decades
4000
3500
Per Capita GDP
(Measured in 1990
international GearyKhamis dollars)
East Asia
3000
2500
2000
A f ri ca
1500
Source: Angus Maddison,
The World Economy: A
Millennium Perspective,
OECD Development Centre,
2001.
1000
500
0
1950
1960
1970
1980
1990
1998
Per Capita GDP in 2004 (＄PPP)
0
Hong Kong
Japan
Taiwan
Singapore
Brunei
S Korea
Malaysia
Thailand
China
Philippines
Indonesia
Vietnam
Cambodia
PNG
Mongolia
Laos
N Korea
Myanmar
East Timor
World Bank data
5000 10000 15000 20000 25000 30000 35000
Green: participants in East
Asian production network
Diversity in Political and
Economic Development
Governance, WGI2005
High correlation
(0.90) but
causality cannot
be argued from
this diagram
600
Sin
500
Hkg
Jpn
S Kor
400
Mal
Mong
300
Twn
Only circled
economies
participate in
regional dynamism
Bru
Thai
Phil
VN
China
200
Camb
E Timor
Indo
PNG
Lao
N Kor
Mya
100
0
100
1000
10000
100000
Per capita income ($PPP2004, log scale)
Sources: Compiled
from World Bank,
Worldwide Governance
Indicators, Sep. 2006;
and World Bank, World
Development
Indicators, 2006.
Different Speed of Catching Up
Per capita real income relative to US
(Measured by the 1990 international Geary-Khamis dollars)
100%
Japan
80%
Taiwan
S. Korea
60%
Malaysia
Thailand
40%
Indonesia
20%
Philippines
Vietnam
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
1950
0%
Sources: Angus Maddison, The World Economy: A Millennium Perspective, OECD Development Centre, 2001;
the Central Bank of the Republic of China; and IMF International Financial Statistics (for updating 1998-2006).
Wrong Lessons from East Asia

WRONG: Mindless copy of a policy adopted
by some E. Asian country in the past
(ex. postal savings, heavy industry drive, Green
Revolution, etc)

WRONG: Strong government should direct
private sector activities
(In East Asia, private dynamism informed and led
policy direction)

WRONG: An authoritarian state is needed
for economic take-off
(research on “Democratic developmentalism”—can
we have development without a dictator?)
Development and Aid Strategy
There is a clear difference in developmental
orientation between Eastern practitioners and
Western aid community.
East Asia’s Way
Goal
Economic prosperity
and national pride
Policies Investment, trade,
skills, technology
Key
Central government
actors and businesses
Western Donors
Poverty reduction
(MDGs)
Health, education,
governance
Local communities
and poor people
Learning Industrial Policy
Formulation





Political will and national obsession (not
just “ownership”)
Pursue growth policies and social policies
(separable)
Vision  goals  action plans
Field-based pragmatism, attention to
details
A permanent process for continuously
setting goals and action plans
 General ideas and methods for designing
unique policies for each country
Why Eastern Way Is Hard to Convey
to Others

Emphasis on local diversity
No manuals or policy matrix; no answer available
immediately

Emphasis on doing rather than
talking/writing/advocating
Lack of PR and framework, respect for quiet
action

Language barrier
Internal reports in Japanese only
Our Proposal for
Japan’s New Aid in Africa




Japan should concentrate additional aid on
a few African countries with:
-Strong political will (top leader)
-Social and macroeconomic stability
-Sufficient administrative mechanism
Initiate policy dialogue for formulating
concrete growth strategy
Mobilize available aid tools for executing
agreed strategy
Involve private sector and other donors
Similar Views
Our Report--Diversity and Complementarity
in Development Aid (2008), see pp.11-17.
ODA Manifesto by the Group for Renovating
Japanese ODA, compiled by GRIPS (2007).
MOFA Advisory Committee on International
Cooperation, Interim Report (2008).
JICA-JBIC Report, “Strategy for Sustained
Growth Acceleration in Africa: A View from
Asian Experiences” (in process, 2008).
ODA Manifesto by the Group for
Renovating Japanese ODA (2007)
Proposal 27—Expand ODA for Africa,
especially grants.
Proposal 28—Establish a committee to
specialize in supporting Africa.
Proposal 29—Select model countries for
“aid for graduation” and concentrate
resources.
Proposal 30—Design special facilities to
mitigate risks and promote private
investment in Africa.
JICA-JBIC Report in Progress
Establish “Industrialization Strategy” as a
process, not just a document.
1.
2.
3.
4.
Identify desired vision, economic structure,
and positioning in global value chain.
Through public-private dialogue, discover
growth-leading industries for future.
Identify their constraints (infra, HRD, etc).
Devise measures to remove constraints and
promote targeted industries.
Measures must be consistent with the country’s
institutional capability and executed under
discipline and competition.
Japan’s Development Dialogue
in East Asia




Vietnam – Ishikawa Project (policy
research and dialogue among academics,
officials & consultants, 1995-2001)
Laos – Hara Project (overall development
strategy, 2000-05)
Thailand – Mizutani Report for upgrading
SMEs and supporting industries (1999)
Indonesia – Continuous GovernmentBusiness Policy Dialogue, Urata Report
(2000)
Can We Replicate This in Africa?
The Case of Zambia



JICA is conducting the “Triangle of Hope”
Project 2006-09 (improving investment
climate) mobilizing a Malaysian consultant
under new methodology.
As a next step, Zambia wants Japan to
help formulate a long-term industrial
strategy.
Japanese Embassy, JICA and myself
submitted a concept paper on steps
toward “Zambia Industrialization Strategy”
(Dec.2007).
Our Suggestion for
Zambia’s Next Steps



Precondition – forming a strong supersecretariat under President
First stage (1 year preparation)--industry
surveys, studying East Asian experiences,
receiving experts, seminars, website,
produce Basic Issues Report
Second stage (2 years) – drafting
Industrialization Strategy with JICA
support
-Top leader’s strong commitment is critical
-Mainstreaming of this project among
donors and in Tokyo
More Books from GRIPS
Ohno, Kenichi, and Izumi Ohno, eds (1998), Japanese
Views on Economic Development: Diverse Paths to the
Market, Routledge.
Ohno, Kenichi, ed (2006), Industrial Policy Formulation
in Thailand, Malaysia and Japan: Lessons for
Vietnamese Policy Makers, Vietnam Development
Forum/Publishing House of Social Labour, Hanoi.
Ohno, Kenichi (2006), The Economic Development of
Japan: The Path Traveled by Japan as a Developing
Country, GRIPS Development Forum. Also available in
Japanese, Chinese, Vietnamese, Arabic.